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    Expected Value of Lottery Ticket

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    You are considering paying $5 to buy a ticket in a local lottery. You were told that 10,000 tickets will be sold. There are 5 prizes. The first prize is $5,000, the second is $1,000, the third is $500, the fourth is $100 and the last prize is $10.

    Compute the expected value from the payoff.

    a) $0.661
    b) $1.20
    c) $5.00

    © BrainMass Inc. brainmass.com June 4, 2020, 12:07 am ad1c9bdddf
    https://brainmass.com/statistics/central-tendency/expected-value-lottery-ticket-319969

    Solution Summary

    This solution is comprised of detailed step-by-step calculations and analysis of the given problem and provides students with a clear perspective of the underlying concept.

    $2.19

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